IP Case Law Analysis

Good-Faith Belief of Invalidity May Negate Intent for Induced Infringement

June 25, 2013

What This Means To You

An invalidity opinion of counsel may negate intent for induced infringement.

Overview

In Commil USA, LLC v. Cisco Systems, Inc., the U.S. Courts of Appeals for the Federal Circuit (Federal Circuit) clarified that a good-faith belief in invalidity may negate the requisite intent for induced infringement. Previously, the Federal Circuit had held that a good-faith belief in non-infringement was material, but the acceptance of materiality of belief in invalidity is a welcome clarification to the law.

Case Background

Commil sued Cisco in the Eastern District of Texas over wireless networking technology. In May 2010, a jury found Cisco liable for direct infringement. Commil appealed for a new trial on induced infringement and damages, and in April 2011, a second jury found Cisco liable for direct and induced infringement, with a combined award of $63.7 million in damages.

In the lower court proceeding, Commil argued that while the Federal Circuit was clear that belief of non-infringement of a patent was relevant to establishing absence of intent for the purposes of induced infringement, there was no Federal Circuit case on point regarding belief of invalidity of a patent. This led to evidence being excluded from the proceeding.

Although Cisco appealed multiple issues to the Federal Circuit, the primary issue addressed by the Court was the exclusion of evidence pertaining to good-faith belief of invalidity.

Decision Analysis

Based on the Supreme Court’s decision in Global Tech (that the intent requirement for induced infringement requires an infringer to knowingly induce infringement), Cisco argued that the evidence should not have been excluded because it was material to intent.

The Federal Circuit held that belief of invalidity would be relevant for negating the requisite intent for induced infringement. Previously, only belief of non-infringement was held to be “admissible, at least with respect to [a defendant’s] state of mind.” In this case, the Court held there was “no principled distinction” between a belief of invalidity and a belief of non-infringement; indeed, “it is axiomatic that one cannot infringe an invalid patent.”

Takeaways

This case affirms the importance of opinions of counsel in negating the intent requirement for induced infringement. Obtaining opinions of counsel when reviewing competitors’ patents in freedom-to-operate studies and patentability studies is recommended. However, caution is still required in cases where potential infringement or induced infringement may occur.